Our Stock of the Week is GSX Techedu, Inc (GSX). GSX is a Chinese education company that specialized in online K-12 after-school tutoring services in China. The company covers all primary and secondary courses as well as foreign languages and various special interests.
The company has obviously benefited from school closing caused by the coronavirus crisis, and increased used of online education is likely to be a long-run consequence of this event.
On February 28, Deutsche Bank initiated the stock with a buy rating and a $50 range. The analyst believes that after-school tutoring is the most attractive sector within China’s fast-growing education space.
The company saw revenues grow 406% in the fourth quarter and current EPS estimates are for a jump of 163% in 2020 to $0.42 and an additional jump of 93% in 20201 to $0.81.
Technically, the stock has been immune to the overall market chaos and has formed an attractive ‘wedge-shaped’ chart. The key to this pattern is to move over the downtrend line with enough vigor to produce some momentum. GSX has had a good volume pattern during his consolidation, but it is likely to be volatile.
As always, we will not chase the open on Monday but will look for entry either on lower volume pullbacks or on a move through the downtrend line.
This post is for educational purposes only! This is not advice or a recommendation. We do not give investment advice. Do not act on this post. Do not buy, sell or trade the stocks mentioned herein. We WILL actively trade this stock differently than discussed herein. We will sell into strength and will buy or sell at any time for any reason. We will actively trade into any unusual activity. At the time of this post, principals, employees and affiliates of Shark Investing, Inc. and/or principals, employees and affiliates of Shark Asset Management, Inc. ("SAMI"), directly or indirectly, controlled investment and/or trading accounts containing positions in GSX. To accommodate the objectives of these investing and/or trading accounts, the trading in these shares will be contrary to and/or inconsistent with the information contained in this posting.